Marketing Strategy – Happy Baby Day Care Center

Marketing Strategy – Happy Baby Day Care Center

Introduction

When making a decision to charge product prices, the company must consider other factors besides setting an objective of the price change. The demand of the product, the offerings production cost, the needs of the customers, the external environment which includes, competition, the existing conditions of the economy, government regulations, aspects of the product mix, the current and conditions of the products life circle, its promotion and distribution strategy are some of the factors to consider. If the firm is considering selling its products in the global market, then research on other factors must also be undertaken.

Pricing Objective

Customers play a very big role in the determination of prices. The response of the buyers must be taken into account when deciding the price change of a product. How they perceive the value of the product, how sensitive they are and their number, the size of the existing market and how much the average customer is willing to pay for that particular product. This involves a lot of positive judgment and also research work. Price elasticity or customer’s sensitivity to the changes of the price will also determine the eventual demand of the product. The objective is to offer an affordable price that’s also profitable to the company.

Pricing

To set the price of child care products, the cost-plus pricing can be used. The cost of manufacturing the product plays an integral part when determining the price of the product. The product development, packaging needs, testing and other related costs have to be considered. For instance, when a new drug is being introduced into the market, its marketing and distribution costs are much higher and they are likely to influence the cost of the product to be high. Cost- plus method of pricing takes care of the costs of the processes involved in the manufacturing process. There is also a profit margin that can be utilized to calculate the real cost of the product and how much it should be sold to achieve the desired profit margin.

Cost- Plus pricing method

Production costs are calculated and then the profit margin is determined. For example, if the production costs of a particular product is $100 and the company wants a 20% profit then they will charge $120. For Happy Baby Day Care Center the costs would be:

($) All figures are in US. Dollars	Happy Baby Day Care Center
Land	100,000
Vans (3 No’s)	6000
Renovations (existing bld)	5000
Preliminary Exp	10,000
(Business registration, legal
advice, licences, feasibility
Studies and other consultancies)
Total cost	121,000

Pricing strategy ( Cost plus pricing method)		Cost
Target of the number of children
in the first three months 100
The total cost of land is spread to
be recovered in two years or 24
months i.e. 100000/24 = 4170	4170
The Preliminary & other Expenses
will be written off in the first	21000
Month.
25170
Other costs
Administrative costs
Salaries ( three drivers and their
helpers) drivers @ $3000 p.m. and	15000
helpers @ $2000 p.m.
5 cleaners & 5 cooks (2000 each)	20000
Food and other expenses	30000
Overheads bills (power & water)	2000
Insurance & medical cover	1000
Contingencies	2000
Total Expenses	120340
Add 20%	144408
Cost per child p.m. in $	144408/100
Initial cost per month	1444.08
Amount chargeable per child	$1450 p.m.

Other alternative methods of pricing products

Targeted Return pricing Method

The total investment costs are calculated and determined. The price is then set at a rate that is above the ROI (Return-On-Investment) For example, if you have invested $50,000 in a project and the volume of sales is $1000, then the price of each unit should be above $50. That’s from $51 dollars and above.

Value Based Pricing

Value based pricing involves pricing the products based on the real value it creates for the client. For instance if a personal counseling session is worth two sessions for the client then he should be charged accordingly.

Psychological Pricing

Psychological pricing involves pricing the products in a way that it receives a positive response from the clients. For example, pricing a product $199.99 receives a better response than pricing it $200.00 Also pricing the products at a lower value it may give a negative signal as people associate very low prices with poor quality while higher prices are normally a sign of superior quality. This is applied while positioning the product in the market.

To provide the basic information of the existence, the company must come up with a marketing communication strategy that will involve making key decisions about who the customer is, how they will be contacted and what kind of message should be conveyed. For instance, Happy Baby Day care will target different distinct groups depending on the message and taste of the potential customers. Happy Baby Day Care Center will target the single working class women, the business people and those parents who can’t take care of their children. This process, known as market segmentation divides the market into groups which are very distinct from each other. In one of the messages, Child care services would target the working class with such messages referring to good health and safe living environment. (Kotler, P & Armstrong, 2010)

Segmentation

. The importance of market segmentation is that it increases the efficiency in marketing operations by narrowing the market specifically toward a designated and defined segment in a way that is consistent with the characteristics of the segment. Market segmentation leads to product differentiation from each segment while tangibly or intangibly differentiating it from the rival products from the competitors. (Sullivan, Sheffrin, 2003) The different products that would be available at the Happy Baby Day Care center would be according to their ages. These are 1-2 years, 3-4 years, 4-5 and 5-6 years. The cost would vary as the toddlers need more attention and care as their age’s progress their personal care decreases so will be the cost per child. The toddlers would be charged at an increased cost $500 dollars and the 3-4 by $250.

Positioning

Positioning involves the development of brands as the images of the company’s products or services. The combination of all the required elements of marketing mix is needed to achieve the required strategy. Positioning explains the uniqueness of the services in the market place and also its advantages against the other childcare products available in the market. For happy Baby Day care center it would be its additional 24/7 service. While all the major competitor’s operator during the day only, Happy Baby Day Care Center would operate all round the clock. Branding is a tool that is often utilized to position the product by designing its packaging its best offers in a way that brings out its advantages against the others. For any communication to be effective, the customers must form a picture mentally about his perception of the product which eventually influences the price they are willingly or a ready to pay for the product. Brand equity occurs where customers are willing to pay much more for a product because of its position. (Wood, 2003)

Strategies

Promotional strategy is a function that involves informing, persuading or influencing the decisions of the customer. Its major objective is to develop and promote a products primary demand. Different companies have varied promotional strategies. Some use these strategies to expand in their different markets while others use them to reach selected and particular markets. Most promotional strategies goals are to provide the basic necessary information about the product and to differentiate in order to increase its sales, its value and to stabilize its overall market. (Kotler, Keller, Brady, Goodman & Hansen, 2012)

The development of product advertising message takes place after the product has being successfully position and the potential customers and their needs have been identified i.e. the requirements of the target group. A distinctive, creative and well branded advertising generates impressive results that ensure successfully marketing and promotional strategy. To make the product more appealing to the customers or the target group then the adverts designers should be constantly referring to the customers to tailor according to their needs and tastes.

Happy Baby Day Care Center has identified the market for the day care business. The need to provide the service over night will be a serious competition to the other established Day care centers. The messages of quality service and the availability of efficient, responsible, caring and trained staff.

Sales promotion involves other forms of increasing sales other than advertising, personal selling or public relations through one time or occasional selling. Initially sales promotion was a supplement to a company’s sales efforts or advertising process, but it has become part of the promotional mix for most firms.

Finally to conclude, Happy Baby Day Care center believes that the strong demand created will pull an item or product by compelling the marketing intermediaries to accommodate it through the marketing channels. The introduction of Happy Baby Day Care Center would attract more clients because of its strategic marketing skills and the uniqueness of its services.

References

Kotler, P. & Armstrong, G. (2010) Principles of Marketing. 13th edition. London: Pearson Education Ltd.

Kotler, P., Keller, K. L., Brady, M., Goodman, M. & Hansen, T. (2012) Marketing Management. 2nd edition. Essex: Pearson Education Limited.

Sullivan, Sheffrin, S (2003). Economics: Principles in action. Upper Saddle River, New Jersey

Pearson, Prentice Hall.

Wood, M. (2003) The Marketing Plan: A Handbook. New Jersey: Pearson Education Inc.